Consider the generic ABC graphic below, for a standard two-step allocation process. ON Pool 1 ON...

Consider the generic ABC graphic below, for a standard two-step allocation process. ON Pool 1 ON Poola ON Pool 3 Adity 1 Mility Allvity Produd 1 Produd 2 Produd

Total Assume that the costs incurred in the OH cost pools are / were $47,000 for OH Pool 1; $122,000 for OH Pool 2; and $16,000 for OH Pool 3. Following are some activity measures that are available as possible cost drivers, with quantities for each activity noted: Activitat Activity 2 Activity 3 Activity Cost Driver 1 (D1s) 4,350 2,270 6,140 12,760 Cost Driver 2 (D2s) 870 322 1,598 Cost Driver 3 (D3s) 1,300 1,650 2,100 1,740 6,790 Cost Driver 4 (D4s) 35 55 Cost Driver 5 (D5s) 820 155 108 440 1,523 Suppose the selected cost driver is Cost Driver 4 for OH Pool 1, Cost Driver 1 for OH Pool 2, and Cost Driver 5 for OH Pool 3. Compute the POHR for each of the OH cost pools in this ABC process, and then use those POHRs to allocate all OH costs to the four activities. 406 12 8

Expert Solution

		Costs	Divided by: Total of cost driver	POHR
Overhead pool 1	Cost driver 4	$ 47,000	55	$ 854.54545
Overhead pool 2	Cost driver 1	$ 122,000	12,760	$ 9.56113
Overhead pool 3	Cost driver 5	$ 16,000	1,523	$ 10.50558

Overhead pool 1	Activity 1	Activity 2	Activity 3	Activity 4
Predermined overhead rate	$ 854.54545	$ 854.54545	$ 854.54545	$ 854.54545
Multiply: Cost driver 4	35	12	-	8
Allocated overhead pool 1	$ 29,909.09	$ 10,254.55	$ -	$ 6,836.36

Overhead pool 2	Activity 1	Activity 2	Activity 3	Activity 4
Predermined overhead rate	$ 9.56113	$ 9.56113	$ 9.56113	$ 9.56113
Multiply: Cost driver 1	4,350	-	2,270	6,140
Allocated overhead pool 2	$ 41,590.91	$ -	$ 21,703.76	$ 58,705.33

Overhead pool 3	Activity 1	Activity 2	Activity 3	Activity 4
Predermined overhead rate	$ 10.50558	$ 10.50558	$ 10.50558	$ 10.50558
Multiply: Cost driver 5	820	155	108	440
Allocated overhead pool 3	$ 8,614.58	$ 1,628.37	$ 1,134.60	$ 4,622.46

Final answers:	Activity 1	Activity 2	Activity 3	Activity 4
Allocated overhead pool 1	$ 29,909.09	$ 10,254.55	$ -	$ 6,836.36
Allocated overhead pool 2	$ 41,590.91	$ -	$ 21,703.76	$ 58,705.33
Allocated overhead pool 3	$ 8,614.58	$ 1,628.37	$ 1,134.60	$ 4,622.46
Allocated overhead costs	$ 80,114.58	$ 11,882.91	$ 22,838.36	$ 70,164.15
Allocated overhead costs (rounded)	$ 80,115	$ 11,883	$ 22,838	$ 70,164

ekkarill92 answered 2 years ago

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